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Ten Baggers

May 21, 2011 10:04 AM ET
Tony Pow profile picture
Tony Pow's Blog
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Many posts and at least one from other:

Summary. It is hard to find one unless you buy penny stocks (most of them fail) and then hold them for 5 or more years.

I have my share of making over 100% in a stock. Most are not by design. I just wait to the next yearly peak (about 3 every year), being acquired by another company, waiting to satisfy time requirement for long-term capital gain in taxable accounts...

I have spent a lot of time in looking for Mr. TenBagger. It is not for me. I avoid stocks less than $2 and low volume. I may have many TenBaggers, but I sell them before they reach over 100% and it is easier to make money using the gain to buy stocks for the next 100% gain.

In addition, it is very hard to track performance. To illustrate,

A penny stock goes to two pennies. 100% gain.
A penny stock goes to 0. 100% loss.

Your test portfolio of these two stocks have no gain and no loss. However, for your testing you have 100% gain. Why? The penny stock that goes to 0 is not in your portfolio as your database takes it away as it is not a valid company.

The search to get TenBagger.
- must be less than $2 and low volume.
- increasing growth, value for last 3 years.

# Poortorich writes:

Finding 10 baggers is hard. If someone says they can find one with regularity they are not being truthful. More likely, they were lucky. Did i mention i missed out on a 30 bagger? It still makes me sigh. Finding 2-3 baggers in 5 years is quite common.

poortorich, It is pure luck to find a 10 baggers. As in my previous posts, they belong to a set of stocks with common parameters and high risk.

Buffett has many of them like KO and American Express which he holds for ever. However, they're about 20% annualized gain only. So is Peter Lynch. They're great return, but not if we include the losers for a typical retail investor.

I missed many TenBaggers, but I never feel sorry.

# graham and Dodd Investor writes:

Getting a ten bagger is basically a matter of holding period.

"Ten times in ten years" requires an average annual gain of 26%, achievable, but with difficulty.

Ten times in TWENTY years requires an average annual gain of 12%-13%, just above the market return.

Ten times in THIRTY years requires an average annual gain of about 8%.

Warren Buffett was hoping for a ten-bagger in Coke in 20 years. He got it in ten. But look what happened to his Coke in the "second" ten years.

Disclaimer: All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.

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